ROAS - What It Is, How to Boost It
Results. We talk a lot about them here at Helix House, for good reason. They are what we promise our clients. It’s what our clients need to grow. Results. Whether it’s more organic traffic thanks to SEO, increased clicks from paid campaigns – results are the keys to everything. Knowing what the results are and how to achieve them is why businesses turn to agencies like ours in the first place. We know what a business needs, and we know how to get it. Because we’re obsessed with it. Results.
One of the key ways we measure results is through return on advertising spend (ROAS). It helps us evaluate the effectiveness of different advertising campaigns and make data-driven decisions to maximize our clients' returns. In this blog post, we'll explain what ROAS is, how we measure it, and some basic strategies for improving it.
What is ROAS?
ROAS is a metric that measures the revenue generated from advertising campaigns against the amount spent on those campaigns. It's a simple equation: revenue / advertising spend = ROAS. The higher the ROAS, the more revenue generated for each dollar spent on advertising.
For example, let's say a cleint spends $10,000 on a Facebook advertising campaign and generates $50,000 in revenue from that campaign. The ROAS for that campaign would be 5.0, which means that for every dollar spent on advertising, the company generated five dollars in revenue.
Now hold your horses, I know what you’re thinking.
Is ROAS Just Another Name for ROI?
Not quite. ROI measures the total return of overall investment, whereas ROAS only calculates your return for a specific ad campaign. Essentially, ROI = big picture, ROAS = specific ad campaign. Secondly, ROAS looks at revenue, while ROI considers profit.
Measuring ROAS is relatively straightforward, but it requires accurate tracking of both advertising spend and revenue. For e-commerce businesses, this involves setting up dialed in conversion tracking on their website and integrating it with their advertising platform, whether that’s Meta, Google, etc.
Conversion tracking allows us to track the specific actions that users take on a website after clicking on an ad, such as making a purchase, filling out a form, or signing up for a newsletter – you name it. By tracking these actions and the revenue generated from them, we can calculate the ROAS for each advertising campaign.
In addition to conversion tracking, it's important to track all advertising spend accurately. This means ensuring that all advertising platforms are properly linked to the client's payment method, and that all advertising costs are accounted for, including ad spend, platform fees, and any other related expenses. If a campaign spends more on the weekends than estimated, keep track. If a campaign is underspending make note of that too (and don’t be surprised if it’s underperforming). You need accurate data to get accurate results. It’s just that simple.
So now that you know how to track your ROAS, how do you go about improving it when it’s not doing so hot? Improving ROAS requires a data-driven approach and a willingness to experiment and iterate. Here at Helix House, data-driven is our middle name. (that’s right: Helix Data-Driven House).
Here are some strategies that we use to improve ROAS for our clients:
Target the Right Audience
Targetting the right audience with the right creative is a clear win. Advertising to the wrong audience can be a significant drain on ad spend. By using data and insights to identify the target audience that is most likely to convert, we can reduce wasted ad spend and increase the effectiveness of advertising campaigns.
One way to identify the right audience is through lookalike targeting. This involves creating an audience based on the characteristics of existing customers, such as demographics, interests, and behaviors. Lookalike targeting can help us reach new users who are similar to current customers and therefore are more likely to convert, resulting in a higher ROAS.
Optimize Ad Creative
The right ad creative goes a looooong way to getting conversions. Ad creative can have a significant impact on campaign performance. By testing different ad formats, messaging, and visuals, we can identify the creative that resonates most with the target audience and drives the highest conversion rates.
A/B testing is a powerful tool for optimizing ad creative. By creating multiple variations of an ad and testing them against each other, we can identify the ad that performs best and use that as the basis for further optimization.
ABR - Always Be Retargeting
Retargeting involves advertising to users who have already visited a website or engaged with an ad in some way. Maybe they just checked out the homepage, maybe they got all the way to a full shopping cart. Maybe they’ve purchased in the past. Either way, we want to get in front of them again! Retargeting campaigns often have higher conversion rates and ROAS than other types of advertising campaigns because they are targeting users who have already shown interest in the product or service.
To maximize the effectiveness of retargeting campaigns, we use data and insights to create tailored ad messaging and offers that are relevant to each user's specific behavior on the website.
Monitor and Adjust Bids
Paid campaigns aren’t set and forget. You need ongoing management of bids to ensure you’re not over or under spending. By monitoring bidding performance and adjusting bids as necessary, we can ensure that our clients are getting the best possible return on their advertising spend.
Improve Website and Landing Page Experience
This is huge for everything. A great website experience delivers results in paid campaigns, SEO, organic traffic, you name it. You need a great working website. Even the best advertising campaigns can be ineffective if the website or landing page experience is awful. By optimizing the website and landing page experience, we can improve conversion rates and increase ROAS.
Not sure how your website stacks up? Here are some ways to improve the website and landing page experience include:
- Improving page load speed
- Simplifying the checkout process
- Highlighting key product or service features and benefits
- Adding customer testimonials and social proof
By focusing on the website and landing page experience, we can ensure that users have a seamless experience from ad click to conversion – and that means a higher ROAS.
At Helix House, we use a data-driven approach to ROAS optimization, constantly testing and iterating to achieve the best possible results for our clients. By combining creative strategies with a strong focus on data and analytics, we're able to help our clients get the most out of their advertising spend and achieve their business objectives. Find out how Helix can help your business today!